The Victoria & Alfred Waterfront is set to throw its bid into the ring to develop, construct and operate the first dedicated cruise-liner terminal in the port of Cape Town.
Entering a bid was “absolutely the right thing to do”, said V&A Waterfront chief executive David Green, given the “adjacency” of the proposed site to the Waterfront, the ease with which passengers can disembark straight from cruise liners into its facilities and the fact that the Waterfront is already a working harbour.
The proposed establishment of a dedicated cruise-liner berth in Cape Town goes hand in hand with a similar proposal for the port of Durban.
The Transnet Ports Authority advertised requests for proposals earlier this year, with the deadline for bids set as October 1, according to a copy of a tender notice on its website.
The location in the Cape Town port earmarked for the development is Berth E, adjacent to the Waterfront. The City of Cape Town has long been lobbying for a dedicated cruise-liner terminal to receive tourists.
It is important to have the capability as a city, and the ability to create the right level of experience for the tourists arriving in Cape Town, Green told the Mail & Guardian.
The cruise-liner market is one of the fastest-growing tourism markets in the world, Green said, with 65% of cruise-liner passengers coming back for repeat visits.
He was unable to estimate how much money the undertaking could generate for the Waterfront, but, he said, if the bid was not entered, there was little possibility of capitalising on the opportunity it presents.
Lauriette Modipane, commercial and marketing general manager for the ports authority, said the tender process was still under way and he could not comment.
But the move is in line with renewed efforts to develop one of the country’s most valuable pieces of real estate.
It passed back into South African hands when it was bought in January 2011 for R9.7-billion by Growthpoint Properties and the Public Investment Corporation, which represents the Government Employees Pension Fund.
Development of the site languished somewhat under the ownership of the Emirates investment firm, Dubai World, and the United Kingdom-based London & Regional Properties. Following the financial crisis of 2008, Dubai World, in particular, was severely cash strapped, frustrating investment.
“The arrival of the new owners has meant we have been able to open the purse strings a little bit and start the needed developments,” Green said.
There is a continued demand for residential, retail, commercial and hotel space at the Waterfront, he said.
Recent developments include the No 1 Silo building, an ecofriendly commercial block, which has won accolades for energy efficient and environmentally conscious design.
There are also plans to introduce a new rental income stream for the Waterfront — 270 “smaller, accessible” rental units aimed at young professionals who live and work either in the Waterfront or in the city.
So far, residential property has been geared towards the top end of the market, but “it made sense to have a whole range of different accommodation at the Waterfront”, Green said.
The first phase, of 130 units, will be in the Portswood ridge area, near the Commodore Hotel, with the first units entering the market by October 2014.
Upbeat about investment
According to a presentation of its latest financial results, Growthpoint is upbeat about its investment in the Waterfront.
Retail tenant vacancies are at record lows and it showed strong retail sales growth of 16% year on year to June 2013, recording a trading density of R4 500 a square metre per month.
Footfall growth showed the same trend as revenue growth, Growthpoint notes, with visitors staying about 3.5 hours and spending R175 a head.
But the returns are not accruing to the Waterfront’s investors alone. Research released this week, done on behalf of V&A Waterfront management by Economic Information Services (EiS), estimates that the contribution of the Waterfront and its tenants to South Africa’s gross domestic product (GDP) between 2002 and 2012 was about R198-billion.
According to EiS, the nominal contribution of the Waterfront to national GDP grew from R10.37-billion in 2002 to R28.91-billion in 2012.
The contribution to the Western Cape’s gross geographical product, the equivalent of provincial GDP, was a cumulative R173-billion between 2002 and 2012.
Measuring job creation
The research also measured both the direct jobs created by ongoing operations and the capital expenditure of the Waterfront, as well as the indirect jobs created by the multiplier effects of these operations and the turnover generated by tenants.
According to the findings, the total number of direct jobs created grew from slightly more than 13 000 in 2002 to more than 16 700 in 2012.
In 2012 capital expenditure generated 122 direct jobs, the V&A Waterfront Company employed 232 people, employment by companies supplying directly to the company totalled 1 029 and the tenants employed 15 380.
The tax contribution of the V&A Waterfront and its tenants was also measured, including money paid in municipal rates and taxes and company taxes.
Total taxes increased from R924-million in 2002 to R2.8-billion in 2012 and, over the 11 years, total taxes paid were R18.9-billion.
Future expansion and new and planned development is expected to generate additional growth of 35%, according to the report, and, in the coming decade, could contribute a further R188-billion to nominal GDP.
In presenting the findings, Barry Standish, who led the research, said the distribution of tenants was changing, with the majority not reliant on their location at the Waterfront for growth in their turnover.
This distribution of tenants has helped to insulate the Waterfront from volatile tourism flows and would help to ensure that the tourism industry of the province was not dominated by the Waterfront itself, Standish said.